Photo by: Reuters
PERTH (miningweekly.com) – Iron-ore developer Sundance Resources has struck a deal to restructure its balance sheet and wipe out A$133-million of debt.
Sundance on Monday announced that it had signed a binding term sheet with its noteholders to cancel their convertible notes in return for a combination of equity and a capped production royalty.
The notes, valued at A$132.86-million, have a maturity date of September 23, 2019, by which time Sundance would have to repay them.
Under the agreed deal, each noteholder was offered the opportunity to cancel their notes in exchange for Sundance shares representing between 30% and 50% of the redemption value of their notes, based on a share price of 0.4c each.
The level of equity that the noteholders elected to receive then determined the rate of the proposed production royalty, which ranged from 1% to 1.24% of their share of revenue from the sale of the first 517-million tonnes of ore from the Mbalam Nabeba iron-ore project, in the Republic of Congo and Cameroon.
“This is a transformational deal for all 19 000 Sundance shareholders,” said Sundance CEO Giulio Casello.
“We are very pleased with the outcome as it will clear the company of debt, introduce new major shareholders onto our register, and gives clear support to the development of the Mbalam-Nabeba iron-ore project by converting over half of the value of the notes into a production royalty when the project comes on line.”
Casello said that this significant development would support the introduction of an equity partner into Sundance, which would work with the company to satisfy the needs of the Cameroon government, and the development of the project.
Following the completion of the transaction, Sundance’s top 20 shareholders, which will include all of the noteholders, will own 80% of the shares on issue. Currently, the top 20 shareholders hold a 44% combined stake in the company.
If the transaction is approved by shareholders, Sundance will have some 22.67-billion shares on issue, which at the last sales price of 4c a share, implied a market capitalisation of A$90.7-million.
A shareholder meeting is expected in September.